Page 3 - Cover Letter and Evaluation for Forrest Hoover

vision coverage. Both Medigap plans in your evaluation include some benefits for medical
emergencies while traveling outside the United States, although you’d indicated that you don’t
plan to travel a great deal.

The benefit designs for all 10 Medigap plans are shown on pages 6-7. Here are summaries of
the two Medigap plans in your evaluation.

1) Medigap Plan G. This is a comprehensive Medigap plan, covering all of Medicare’s gaps
except for the Part B deductible ($185 in 2019). That means you will not have any cost-
sharing for Medicare-covered services after you’ve paid your Part B deductible each
year. Beginning in 2020, Plan G will become the most comprehensive Medigap plan,
replacing Plans F and C, which will no longer be sold. You can likely purchase a Plan G
policy in Allen County for $1,350 a year or perhaps less.

2) Medigap Plan High-Deductible F. You indicated that this is a plan you are interested in.
In 2019 after you’ve met this plan’s $2,300 deductible, you won’t have any more cost-
sharing for Medicare-covered services. Since Medicare pays the first 80% of most
doctors’ bills, you will pay the 20% balance until the deductible is met. To reach the
$2,300 deductible, then, you would have to incur more than $10,000 in Part B costs.

Probably the single largest out-of-pocket risk in this plan is the Part A deductible that
you would pay if you were hospitalized. In 2019, the Part A deductible will be $1,364,
and you would owe that full amount unless you had already satisfied the deductible.

The people who fare best with the High-Deductible version of Plan F are those who do
not use a lot of medical services. Insurance companies know that the people who
typically choose this plan are in good health, and so in some cases the premiums are set
lower than the actuarial value of the benefits. I’ve estimated the annual premiums are
$600, but you may find a company that sells this plan for less than that.

There are a couple of things to be aware of in choosing this plan. One is that if you later
want to upgrade to a more comprehensive plan, you will need to answer questions
about your health and pre-existing conditions. Another consideration with Plan HDF is
that as people age and use more medical services, there’s a greater chance that their
out-of-pocket costs will outweigh the premium savings. Still, over the course of a
retirement many people save substantial amounts in this plan.

The pricing of Medigap policies

During the first six months that someone is enrolled in Part A and Part B, he or she has a
guaranteed right to get a Medigap policy without answering questions about health or pre-
existing conditions, although in Indiana premiums will be adjusted for age and gender. Even so,
many individuals in the late 70s and 80s can acquire their first Medigap policy without

3